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WGL Reports "Excellent" Quarter for Retail Marketing Segment
WGL Holdings' retail energy marketing segment reported adjusted EBIT of $27.0 million for the quarter ending March 31, 2015, an increase of $34.8 million, over adjusted EBIT of $(7.8) million for the year-ago quarter.
The improvement in adjusted EBIT primarily reflects higher electricity margins due to lower capacity and ancillary service charges from the regional power grid operator (PJM) associated with fixed price retail contracts. Additionally, prior year electricity margins reflected extreme price movements on commodity prices as a result of colder than normal weather that occurred throughout January 2014. Partially offsetting this favorable variance were lower natural gas margins as benefits realized last year related to weather hedges did not recur. Natural gas margins from commercial optimization and wholesale transactions were higher in the current year which helped to reduce the decrease related to weather hedges.
More specifically electric margins were "significantly higher", as electric gross margin saw a $37 million improvement during the quarter versus the year-ago. WGL Holdings credited procedural changes introduced by PJM as creating more stable market conditions during periods of extremely cold weather
Electric gross margin was lifted by lower capacity, energy and ancillary services charges from, PJM, partially offset by lower sales volumes. Ancillary charges in PJM were "well below" the levels seen during the polar vortex that occurred last year. New PJM procedures that improved generation reliability and cost allocation resulted in lower energy cost and reduced ancillary services cost throughout the winter of 2015, WGL Holdings executives said.
WGL Energy Services was serving 300,100 customers as of March 31, 2015, versus 310,000 customers as of December 31, 2014 and 346,000 a year ago.
The net loss of about 10,000 customers from December 31, 2014 to March 31, 2015 compares to a net loss of 8,700 customers from September 30, 2014 to December 31, 2014
WGL Energy Services had 150,100 electric customers and 150,000 natural gas customers as of March 31, 2015.
WGL Energy Services electric sales for the three months ending December 31, 2014 were 2,988 GWh, a decrease of 2% attributed to a decline in mass market customers, as WGL Energy Services has shifted focus to large C&I and governmental customers, as previously reported
WGL Energy Services natural gas sales for the three months ending December 31, 2014 were 315 million therms.
In the natural gas business, gross margins were $3 million lower as benefits realized last year related to weather hedges did not recur. Natural gas volumes increased 2% in the second quarter versus the prior year, primarily due to increased wholesale optimization activities.
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May 9, 2015
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Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • kabbott@energychoicematters.com
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